Affordable Care Act Penalties Start in 2016 contributor Joshau Katz wrote a great reminder for business owners that the Affordable Care Act takes a much tougher stance on employer health coverage in 2016.

Whether your marveling and impressed with the affordable care act, or you think that the Obama administration deserves to be tarred and feathered for passing it, 2016 is the year you better get your ducks in a row.  Things are particularly dire if you are going to have 50 to 100 full time employees.

Here are some of the tips we got from Joshua’s article found here
  1. The affordable care act, through IRC Section 4980H, is requiring that certain “large employers”  offer health coverage to their full-time employees. If the Health Coverage is NOT offered, or if it is unaffordable, the employer will either pay a fine or pay for the coverage.
  2. Large Employers are forced to “Pay or Play” in 2016 – either offering affordable coverage or paying a $2,000 per employee fine which has specific calculations.
  3. Many of the new requirements are applied to employers who are considered to be “large employers”, defined as a business with between 50 & 100 full time employees or Full Time Equivalents (FTE’s).
  4. Full-Time Employees are those that work 30 hours a week or 130 hours a month.
  5. It’s not just full-time employees that must be considered, Full Time Equivalents (FTE’s) count towards the head count.  You can calculate your FTE’s by counting the hours worked by part-time employees and dividing by 120.
  6. If you are new to business, the mandate is applied to the full-time employees or FTE’s that the employer expects to have during the current year.
  7. If you own multiple businesses, or are intertwined with other entities, there are aggregation rules to ensure circumventing the mandate is difficult.
  8. There are standards that determine whether it is “affordable”, which is determined by testing the what percent of the employees earnings must be contributed to pay the premiums.  There are three tests.
  9. Paying the fine wont be fun in 2016, but all employers under 100 are exempt from the fine in 2015.